What Is IRS Publication 517?
IRS Publication 517: Social Security and Other Information for Members of the Clergy and Religious Workers is a document published each year by the Internal Revenue Service detailing the ways that those who work in or perform services for religious organizations and orders are required to file their income, Social Security and Medicare taxes. As religious employees, these taxpayers are provided with certain tax benefits and modifications of the usual tax rules.
- IRS Publication 517 provides tax information for those who are members of the clergy or other religious workers.
- Publication 517 details the ways that those who work in or perform services for religious organizations and orders are required to file their income, Social Security, and Medicare taxes.
- In regards to Social Security and Medicare, Publication 517 indicates which forms of income are payable under the Self-Employment Contributions Act (SECA) system or the Federal Insurance Contributions Act (FICA) system.
- Publication 517 also indicates how to calculate taxable earnings, and how to apply for tax exemptions.
Understanding IRS Publication 517
IRS Publication 517: Social Security and Other Information for Members of the Clergy and Religious Workers delineates and updates the income tax and Social Security/Medicare tax rules for those who serve in a ministerial capacity, are members of recognized religious orders or sects, or are some other sort of religious organization employee. The regulations regarding Social Security and Medicare taxes in particular can be complex.
These two taxes are collected through either the Self-Employment Contributions Act (SECA) system or the Federal Insurance Contributions Act (FICA) system. IRS Publication 517 helps to determine which forms of income are subject to SECA, and which are subject to FICA rules.
As of 2017, under SECA, the self-employed individual qualifying for this category is responsible for paying all of their own taxes. Under FICA, the employer and the employee are each responsible for half of the taxes due to Social Security and Medicare. All clergy or religious workers will be subject to one of these systems, but not both.
In addition, as of 2020, wages and self-employment income for clergy and religious workers are also subject to a 0.09% Additional Medicare Tax if it exceeds a certain amount. Form 8959 is used to figure the supplemental tax owed.
Who Is Affected by IRS Publication 517?
IRS Publication 517 applies to several ministerial categories. Here's how the FICA/SECA rules break down for those performing ministerial or religious services.
Religious services, in general, are the services performed in the exercise of a ministry, in duties required by a religious order, or in the exercise of a person's role as a professional Christian Science practitioner or reader.
- Ministers are typically covered under SECA, so long as they do not have an approved IRS exemption. These ministerial earnings are exempt under FICA.
- Members of a religious order who have not taken a vow of poverty are typically covered under SECA, so long as they do not have an approved IRS exemption. These ministerial earnings are exempt under FICA.
- Members of a religious order who have taken a vow of poverty are typically covered under FICA if the order has elected for FICA coverage, and the individual worked outside of the order but was not required to do so. These ministerial earnings are exempt under SECA.
- Religious workers or church employees can be covered under either FICA or SECA, depending on which category the employer elects to follow.
- Members of a recognized religious sect can be covered under FICA if they are an employee without an approved exemption from the IRS, or under SECA if they are self-employed and do not have an approved exemption from the IRS.
- Christian Scientist practitioners or readers are typically covered under SECA if they do not have an approved exemption from the IRS. These ministerial earnings are exempt under FICA.
Along with indicating which and whose earnings are taxed under which system, Publication 517 also delineates how members of the clergy or religious sects figure net self-employment earnings, and how to apply for exemptions from self-employment and FICA taxes.
Download IRS Publication 517 Here
Like most IRS publications and forms, Publication 517 can be downloaded in PDF form from the IRS' official website.
As with many IRS regulations, various stipulations of Publication 517 change from year to year, so it is imperative that all those affected by this section of the tax code always refer to the latest version. The website also furnishes the latest information and developments relating to the regs at IRS.gov/Pub517.